What’s new: Two former executives at a now-collapsed Chinese online lending platform were sentenced to 20 years in prison and fined 92 million yuan ($13.2 million) for fundraising fraud, illegal collection of public deposits and manipulating the securities market, state broadcaster CCTV reported Thursday.
Tang Jun, former chairman of online peer-to-peer (P2P) lending platform Tuandai.com, and Zhang Lin, former general manager of the company, were among 47 people sentenced in the case by the Dongguan Intermediate People’s Court in southeastern China’s Guangdong province.
Paisheng Technology Group Inc., operator of Tuandai.com, was fined 1.61 billion yuan for fundraising fraud, illegal collection of public deposits and manipulating the securities market.
The background: Tuandai.com was among more than 2,000 P2P lending platforms that failed since early 2016 amid a regulatory cleanup of the industry. Once a leading player that started business in 2012, the platform was investigated for allegedly taking public deposits illegally after controlling shareholders turned themselves in to police in 2019.
Between 2012 and 2019, Paisheng illegally operated Tuandai.com without licensing, collecting more than 30 billion yuan of funds from the public by promising high returns on financing projects and wealth management products, the court found.
The P2P lending business model was introduced to China in 2007 and began explosive growth in 2013, reflecting the country’s huge demand for small loans among private borrowers who had limited access to bank lending.
But the lending form quickly generated problems as platforms sought higher returns by packaging customers’ funds into high-yield wealth management products and raising money to invest in high-risk projects. Inadequate oversight also allowed speculators and borrowers with poor credit to flood the sector.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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